Commission: Out of touch, out of date, out of pocket April 2017 Commission: Out of touch, out of date, out of pocket | April 2017 1
It’s a truth universally accepted House prices have soared by 253% in the last Michael Bruce, CEO, Purplebricks: 20 years, from an average of £61,830 to that when selling a property, estate “Commission is an unfair and outdated model £218,255*. As house prices have boomed so that no longer has a place in today’s market. agents will charge a percentage have the profjts scooped up by high street Homeowners are entitled to a fair, transparent commission based on the fjnal sale agents – the commission on the above and convenient way to sell their homes and it is no longer acceptable to charge ever-increasing examples has gone up from £1,113 to £3,929**. price agreed. That’s just the way fees just because that’s the way things have things are and always have been. Despite rising house prices making always been done. commission rise year on year, it is not the Yet why is this the case? Is this a “This report shows that commission is the charge case that consumers are getting more for fair deal for the consumer? Is it people dislike paying the most when they sell. their money. The property industry has But it doesn’t have to be that way, there is an right that the fee has remained changed radically in the last few years. The alternative: a fair fjxed fee with the same personal unchallenged for so long? days of trudging around town, going to every service of the high street. We want to help as estate agent in the street to fjnd out what’s many customers as we can avoid commisery - Commission is supposed to incentivise on the market have long gone, as buyers now that feeling of kicking yourself because you could agents to work harder but the work involved have got the same service for less.” prefer to search from the comfort of their in dealing with a £100,000 home is the same own homes, or on the move, via property as with a £1 million mansion. And because the portals such as Rightmove and Zoopla. estate agent isn’t paid until a sale is agreed, Technology has freed buyers from the rigidity home owners, who have no visibility of ofgers of working hours and now it’s time for things received other than information relayed by to improve for sellers too - those who the agent, can’t feel certain they have been actually pay the bill! made aware of all ofgers, or the exact position of those making the ofger - so can feel left unsure of whether they’ve accepted the very best ofger for them. Commission: Out of touch, out of date, out of pocket | April 2017 2
The fees we hate to pay Which costs annoys you most when moving home Estate agents commission for selling 35.00% • Over one third, 35% rated the your old home commission paid to estate agents Stamp Duty 27.92 % as the most annoying cost of Cost of solicitors and search fees 26.22 % moving home Cost of new furniture 3.99 % • 28% stated stamp duty as the most Cost of new fjttings 2.29 % annoying cost Other 1.20 % • 26% said solicitors fee were the worst cost they faced What is the worst thing about buying a new home Too expensive and too complicated The legal process 38.81 % The cost 26.42 % • Almost three in ten (28%) think Actual moving 18.05 % the legal process is unnecessarily Dealing with estate agents 11.37 % complicated Leaving your old home 10.77 % • The overall cost of moving is deemed Getting to know new neighbourhood 1.69 % too expensive by over a quarter 26% Other 2.89 % Commission: Out of touch, out of date, out of pocket | April 2017 Commission: Out of touch, out of date, out of pocket | April 2017 3 3
Choosing who will sell your home “I would recommend Purplebricks. Not only do you get a service equivalent to any other Understanding what we will get for our money and the commission we will pay are the deciding estate agent, but the fees are a third of what factors when it comes to engaging an agent to sell a property: high street agents charge.” Mrs Glenda Carroll, March 2017 • 34% want to know what the agent will do for them and how effjcient they are “We have always used traditional high street • A third (33%) of respondents regard the amount they will be charged as the deciding factor estate agents and Purplebricks makes them • One in nine (11%) describes dealing with estate agents as the worst thing about buying a look like outdated amateurs. The ability to new home access your account out of hours, long after estate agents have shut their offjces and • 10% go to an agent that is recommended by family and friends. turned ofg the phone is essential for most house hunters who need to be at work during • Less than 5% are concerned about an agent having a high street offjce in the locality the day to pay a mortgage.” Mrs Jenny Dunn, March 2017 Time for a change 95% fjrst searched the Internet when looking for a new home • Four out of ten (42%) like a dashboard to be available online to gauge interest in their property • Three out of ten (29%) want a full service 24/7 Commission: Out of touch, out of date, out of pocket | April 2017 4
Perceptions about commission Are you aware that you can pay a fmat fee and avoid a percentage • House sellers are becoming more aware of the difgerent ways to sell a property and the commission when selling your home business of estate agents is changing. 80 • Seven out of ten are aware they don’t have to fork out a percentage commission on the value of their property 60 40 The fjnal bill can be more than expected and a bit of a shock 20 • 96% underestimated how much they would have to pay to sell a £500,000 house • Almost half (44%) of house sellers have paid more than £2000 in commission on a sale, one in Yes No six (17%) have paid more than £4000 68.89 % 31.11 % • One in fjve (21%) said paying such a large commission was the worst part of the selling process “I would highly recommend using Purplebricks. • Just over one in seven (16%) said the thousands of pounds they were charged for selling their There are no hidden costs, just straightforward home came as a surprise and they were not aware of how much they would be asked to pay. fjgures. Thanks guys.” Joanne Tillman, March 2017 “In a digital market place where people search Easy money and a poor perception of value for their own property needs it seemed to us that high street estate agents were not ofgering • 47% felt estate agents represented average value for money a service that justifjed their commission. Enter • 42% felt they represented poor value for money Purplebricks. For a fjxed fee we gained a fmexible and vendor- • 16% felt the estate agent hadn’t done enough for the money they were paid centred model for marketing and selling our • Only 10% felt they ofgered good value for money property and it saved us a hefty commission.” William Spanjers, March 2017 Commission: Out of touch, out of date, out of pocket | April 2017 5
When asked how they would If they didn’t have to pay a large commission, this is what buyers have felt if they had appointed would spend money on an estate agent to sell their Most house buyers were aware that they would have to fjnd thousands of pounds more after property only to fjnd they buying their new home. Last year over 1m homes changed hands and an estimated £4 billion was could have purchased the paid out in commission on sales. If buyers could have saved money this is what they would have same service for a lot less, spent the cash on: almost all - 94% - said they would feel annoyed with six out of ten saying they would be “very annoyed”. New carpets & curtains New kitchen New furniture New carpets and curtains were a A new kitchen would be an additional New furniture would be needed priority for one in four (24%). expense for one in six (18%). by one in seven (14%). “I had a few of the traditional offjce-based local estate agents round to quote and they would have cost me £7,440 to sell my property. Instead I chose to use Purplebricks and their Local Property Expert, who lives in the area and is an experienced agent and I saved myself £6,178 - the cost of a luxury holiday for two for 2 weeks Holiday New bathroom New garden in the Maldives. I know where my money is One in eight said they would One in nine said they would install Work on the new garden was better spent.” splash out on a holiday (12%). a new bathroom (11%). mentioned by one in twelve (8%). Pete McKenzie, March 2017 Commission: Out of touch, out of date, out of pocket | April 2017 6
Notes Purplebricks Group plc Survey of 1003 respondents who had sold a home Cranmore Place, Cranmore Drive, Shirley, Solihull, carried out by Atomik Research Jan 2017 West Midlands, B90 4RZ. *Land Registry UK House Price Index and Nationwide House Price Index **Average commission paid 1.8% (1.5% plus VAT) Commission: Out of touch, out of date, out of pocket | April 2017 7
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